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5 Trends for Future of Radio

The radio industry finds itself in a familiar yet precarious position entering 2011—traditional revenues are sustainable enough to continue with decent returns yet not enough to invest in transitioning to digital without re-evaluating some fundamentals of the business. The result is that the emerging trends will not be revolutionary so much as evolutionary, and the key will be finding those points where traditional methodologies and digital extensions converge the greatest.

Here are five of these points:

1. Gathering and organizing listener data becomes priority one

While radio has historically been about broadcast, at the center of current digital development, from mobile to social media to streaming to advertising, is the unique user. That disconnect will start to be addressed by broadcasters in 2011. Gathering, identifying, and communicating with radio listeners at a one-to-one level will be the centerpiece of radio's—indeed, all of media's future.

2. Local advertisers start to demand digital accountability

More than anything, this will focus radio's attention on digital. John Wanamaker's famous quote "Half the money I spend on advertising is wasted. The trouble is I don't know which half" will start to haunt radio in 2011. Why? Because digital publishers and ad networks are saying you don't need to guess anymore—and local advertisers are listening. They'll only pay for the half which works. Radio's shotgun approach to advertising will look more and more inefficient and not worthy of premium rates.

For radio, this will require working with their digital assets. This will entail everything from targeted advertising in audio streams to coupon deals presented in similar fashion to Groupon.

3. User-level ad targeting starts to redefine the value of streaming

This is closely related to trends number one and two. Digital agencies have completely ignored streaming through 2010 and traditional agencies offered marginal CPMs. The addition of user-level ad targeting will take CPMs to compelling levels thanks in part to digital agencies, who will finally be seeing a similar ad environment to what they see in display-ads targeted to specific users based not only on demographics, but their actual interests and behavior.

4. Digital agencies finally notice radio

As radio embraces more digital strategies to remain relevant to their existing advertisers, a positive side effect will be that digital agencies will turn their attention to radio. This will be a huge boon for the industry as ad revenue continues to erode from traditional agencies and move to digital. Key drivers will be the continued growth of streaming, local digital initiatives like daily deals, improved user-level targeting, and direct digital marketing via things like email and texting.

Radio somehow got left behind when services like Foursquare and Gowalla were out looking for media partners, but that will change in a big way in 2011. The ability for radio to go to an advertiser and utilize a digital platform to send their huge reach into stores is a huge opportunity.